Welcome to episode #12 of the Fiduciary U™ Podcast. My guest today is JD Carlson, owner and CEO of Plan Design Consultants, a third-party administrator that was started by his father and has been in business for nearly 50 years. JD is also the host of the popular web show, Retireholi(k)s, a series of laid-back videos on 401(k) retirement plan industry topics. Today he joins the show to discuss the critical role of a third-party administrator (TPA) and how his firm strives to differentiate themselves from other TPAs by delivering their smarteasyawesome service model.
Listen in as JD shares his thoughts on fees, the convergence of health, wealth, and retirement, and how the hunger for participant data is shaping the industry—creating both benefits and potential risks for plan sponsors and advisors. All this from one of the most colorful (and astute) pros in the industry.
What You’ll Learn:
“Our tagline is ‘different by design.’ So it is our intention to catch your attention.” - JD Carlson
“If you can make an advisor more successful, then they are going to want to partner with you, and to me, that is the secret sauce.” - JD Carlson
“When you’re working with a specialist, they’ve seen everything before.” - JD Carlson
Josh Itzoe: JD Carlson, welcome to the Fiduciary U™ Podcast, I am super pumped about this conversation today.
JD Carlson: Thanks for having me, man. I'm stoked to be here. You know I love me some 401(k). So slap that together with a podcast, and I'm game.
Josh Itzoe: I am too 401(k) nerds. So you are well known within the retirement industry as the owner/CEO, let's say, of Plan Design Consultants, we'll talk a little bit about that. You're also the host, or I guess I should say, co-host of Retireholiks, which is a 401(k) industry.
JD Carlson: Oh, screw that.
Josh Itzoe: I don't want to disrespect your co-hosts, but I think you're the talent.
JD Carlson: I'm the Justin Timberlake, so they're in sync, that's for sure.
Josh Itzoe: For two guys in their late '40s, that's a solid, mid to late '90s boy band pull right there. Well done. So this is going to be a really cool show. I think just in terms of talking a little bit about your background in the industry and the role of third party administrators, what that looks like evolving. We'll talk about the industry a little bit. But as we get started, why don't you share with the audience for those who may not know, why don't you share a little bit about Plan Design Consultants in the history of the company and what that looks like, what you do and we'll go from there.
JD Carlson: Plan Design Consultants is a third party administration firm. Probably important for me to clarify for any 401(k) peeps out there, we're a compliance only firm, so we're not doing record keeping. But founded in 1975 by my father, Paul Carlson. I was four years old at the time, transitioned to myself. My father was my guru man. I shadowed him, he taught me everything I know about running a TPA firm and industry as a whole. So thanks to him. He's retired. I bought the firm from him. I've got 25 employees, we've got offices up in the San Francisco Bay Area. And then down here, I'm in Encinitas, California.
I consider some national TPN, and we service advisors across the entire country. And we really enjoy what we're doing, have a lot of fun, as we will talk a bit about Retireholiks today, we're trying to bring what associate planners and consultants, is trying to bring a new spin to what it means to be a TPA. We're trying to bring a little bit of fun to the gig, try and bring a little excitement to the gig. And so we'll talk a little bit more about that. But yeah, we definitely feel like we've done... you stack up 100 TPAs, we think, you stick out like a sore thumb, and that's on purpose, so.
Josh Itzoe: Yeah, I would say you're not the traditional TPA. Quite frankly, I think, you bring a lot of flair and energy to an industry that isn't really known for being having that much personality. If we were in office space, you'll definitely would be Jennifer Anne's co-worker at the Ruby Tuesday's or whatnot that wears all the flair. And I think you bring up-
JD Carlson: As a soothsayer, when I was a kid, I love the analogy. But if I was a good marketer and sales guy, which I'm not, our tagline is different by design, so yeah, it's our intention to stand out and catch your attention or the market's attention, so yeah. But you know what else is, we'll talk more about it, but is just having fun, we have a lot of fun at what we do. I seem weird for 401(k), but it's very, very true.
Josh Itzoe: Yeah, it's interesting and I've learned this with this podcast as well, is it's just fun to have conversation with really smart people that are experienced, that have perspectives. And the best part of this podcast for me is the learnings that come out of it, because I get to talk to people who care about this industry, and care about the direction of it. And just for dialing in to what's happening, I learn a lot along with the audience. So let's talk about the role of a TPA because as you mentioned, you're trying to be different by design. Out of 100 TPAs, you absolutely are sticking out like a sore thumb in a very positive way.
I would say that the role of TPA, since I've been doing this for 15 years or so, you've definitely seen, I think the kind of TPA side of the world, quite frankly, has been under pressure a little bit. You see more of these record keepers that are trying to go more bundled. In my latest book, The Fiduciary Formula, I have a whole chapter dedicated to what to look for in a good TPA, and how that's different than a record keeper and whatnot. So why don't you talk about though, from your perspective, and I think you guys have done it very successfully, and carved out this niche where the role that you play and the role that a really good TPA plays, because you hear a lot about advisors, you hear a lot about record keepers I would say, and I don't want you to take this in the wrong way. But you know, a lot of TPAs have struggled to carve out their seat at the table in a lot of ways over the, call it the last decade or so, I think you guys have done it successfully.
So talk a little bit about how you think the interplay of a really good TPA in the mix. What's important about that? And how does that relationship work between advisor and between record keeper? And when it's working well, how do you see the combination of a good independent TPA, a good independent advisor and a record keeper work really well on behalf of a plan sponsor?
JD Carlson: Yeah. First, let me state that this concept or this contrast between bundled and unbundled, unbundled being the use of the TPA third party administrator, has been in existence since the beginning of time, right, beginning of 401(k) plan. So I see it differently. I really feel like TPAs currently have really come more into the spotlight, and people understand the TPA a lot more than if you were playing as consultants back in the '70s, and the '80s and the '90s. So I see opposite to some people in some of your comments. I think 20 years ago, 25 years ago, that was a much harder sell or conversation to have. Whereas today, I think TPA is, I know this for a fact, TPA is gaining more and more market share, right? So TPAs are more popular today than they were 15 years ago and 20 years ago.
Now, to second part of your question, why is that? Well, what does the TPA do? We do the compliance work, right? So ADP testing, ACP testing, 5500 preps, document preparation and plan amendments, all the sexy stuff, right? And you could have that done by an independent third party administrator, you can have that done by your bundled record keeper. I've always looked at it though as the fact of the matter is that it's going to be done by somebody in a chair, sitting at a desk with a computer, with a salary, with experience, hopefully, using the right software. So it's being done in both scenarios.
And so my point, that is there's a cost that exists in both those scenarios, whether it's bundled or unbundled. I think unfortunately, a lot of times people look at it like, "Oh, well, if it's being done at the record keeper, well, then it's just free, or it's cheaper," or whatever they're making up in their head. And reality is, it's just simply not true, right? It's being done in both situations. So now you come to the point of how would you prefer to have it done? And obviously, I'm selling my own family business here, but I would think most consumers would far prefer to have a company doing that. By the way, let's hit the pause button. Very important, very complicated, very serious work. I mean, I don't have to tell you that, we're talking about every—
Josh Itzoe: Big time.
JD Carlson: Yeah, big time stuff.
Josh Itzoe: Yeah, big time.
JD Carlson: So would you rather have a firm that specializes in only that and that's what they do, that's what they hold and breathe and sleep and do every day? They've got staff members that have been there for decades, and just... that's what they do, that's their niche. Or would you rather be housed in some dark gray, black and white cubicles in some massive building in the city underneath some bundled record keeper? Being super bias here, as I paint my picture. So there's that. To me, that's an easy choice.
But then the next big thing is, it's this advisor, TPA relationship, right? So a lot of TPAs come to me and say, "How do we succeed? What are we going to do as things change into the future?" And I have a broken record response to them, which I'll repeat here, which is, "We see our client as the advisor first, right? So as a TPA, if you can build your model around supporting the advisor and making that advisor more successful in terms of prospecting, marketing, higher close ratio, win a sale, client retention, strategies, education, understanding regulation changes. If you can make an advisor more successful then, they are going to want to partner with you, they're going to want to work with you."
And to me, that's the secret sauce. Of course, we need to do our work properly. And we need to continue to focus on our own operations, our own efficiencies, our own quality of work, our own service metrics, all those types of things. But at the same time, we need to be obsessed with, are we a value add to the advisor? And think outside the box, when we think about that question, "How can we be just so necessary to the advisor, that given the choice between working bundled or unbundled, it'd be a no brainer for that?" That's my take on—
Josh Itzoe: No, I think those are great perspectives. And hope I did not offend you with the question? I actually think-
JD Carlson: No.
Josh Itzoe: ... what you just said is hugely important, and I want to unpack a couple of different things. Because I when I think of a really good TPA, I think of exactly what you said, it's compliance focused, it's technician focused. And I think what's happened just in the industry, and I write a actually a lot about it in my book, is that a lot of these big record keepers, and I'm a big time nerd, and really focused on retirement plan economics. I still think within the industry, I think there's a lot of excess within the industry, fee wise in terms of services being delivered. And there needs to be somebody who's taking a third party, there needs to be some fiscal accountability and responsibility.
What I've seen, though, in the industry, is that the talent, if you will, not to take away from there being good people at record keepers, but these record keepers that have been getting by specialists have been getting pushed on fees. What I've seen is that service levels are declining, right? That turnaround time for-
JD Carlson: They have to, right?
Josh Itzoe: ... these... They have to, right? Their turnaround time, because what they're doing is they're saying, "Okay, we're going to try to get more profitable at the record keeping level." And we don't have some of the levers like we used to like with high cost active proprietary funds that we could get juice off of. And so what they're doing is they're saying, "Okay, we're going to right size our business, we're going to try to get more profitable. We're going to load up our day-to-day RAMs, and we're going to give them two or three times as many clients, which is going to impact responsiveness. We're going to hire junior people, because they're less expensive." And so those people-
JD Carlson: Cheaper, for sure.
Josh Itzoe: ... aren't going to be as technical. They're cheaper. And so it's interesting, I would just say, I think we have, on the bundled side, I think we have a, honestly in my opinion, in my experience, we have a service crisis in a lot of ways. And what's happening is, I know for myself and our firm, and then my colleagues at other firms like ours, retirement plan specialists and advisory firms, we're experiencing indirect fee compression. And what I mean by that is, clients are still having issues, and in some ways, those issues on the compliance side, because compliance issues, everybody wants to scare people about fiduciary responsibility.
And not that, that's not possible, but it's pretty improbable. But I tell you what, compliance failures and having to go through epicures and having to self correct, or having to do a VCP filing, that stuff gets expensive, all the time, gets expensive. And I think the quality or those errors are going up is the quality of call it the compliance function is going down in this desire to save costs.
JD Carlson: Josh, not-
Josh Itzoe: And so doing that...
JD Carlson: Not only are they expensive, but I just as a business owner, myself, they're stressful. Those are the types of things that really keep business owners up at night, right? The last thing you want to have problems with is the IRS and Department of Labor, and that type of stuff. So it's very, very stressful, not only is it expensive. I want to piggyback on what you said, because I love that you said it. Your brain works so logically, we go through this decompression-
Josh Itzoe: After this is over, can I get you on a quick call with my wife, talk to her a little bit about my logical brain—
JD Carlson: 100%.
Josh Itzoe: Give me a solid.
JD Carlson: Absolutely. I just feel like a lot of people don't think of it that way, and you've really connected the dots very logically. If you go through fee compression and you force these large record keepers to go from, say, 60 basis points to 40 basis points or whatever it is, I'm just pulling picking numbers up, but of course, they're going to take measures and make changes, and you highlighted them, so I won't go back over those all over again. But that is absolutely happening as any normal business would. I think that's a big, big problem that doesn't get talked about enough. And so I'm glad that you're bringing a spotlight to that, and I think more people should pay attention to that.
Josh Itzoe: And the thing that it does for good advisors like us is the clients still have issues, and some ways, their issues are increasing. And now you get these record keepers who are not as responsive. So question that got answered in a day, takes a week or takes two weeks. And so then clients are, rightfully so, they're pulling us into the discussion. I would say, relative to three years or five years ago, our team spends far more time on phone calls with clients trying to fix just provide run shotgun on operational issues or failures and things that came up. And what it's creating is indirect fee compression for advisory firms, because we can't necessarily charge more for that, but we're pitching in to help clients. And the more time you spend on that means the less time you can spend on growing your business or working on strategic issues, and so-
JD Carlson: Your cost of goods and your overhead is getting higher, where your revenue is remaining—
Josh Itzoe: It's getting higher.
JD Carlson: Josh, it's not just the fact that I, because you mentioned the fact that they're going to hire less experienced people. I also want to point out that a big comparison or contrast between bundled and unbundled is, these large corporations are built on internal operations, right? They love to create workflow change like, it's got to be A, B, C, D. And the reality is that our industry is so complex. And it's so many different curve balls and screw balls, and things come at you from a compliance perspective, both as an administrator and as a plan sponsor that, to try to answer them with a square peg square hole type of thing, really doesn't make sense in 30% of these scenarios.
And so what you end up having is right, someone on the other end of an email, on the other end of a phone call that doesn't have the experience. And they're trying to answer questions and problems with some type of pre-determined internal operation Q. And it's just a little cluster F, you know what I mean? And so, the reality is that they can even make mistakes with their counsel and their advice. And so they start dragging a plan sponsor down what they think is the sequential solution, and the reality is they're digging themselves a deeper hole.
And so here I go, again, promoting my own shop and my peers. But when you're working with a specialist, they've seen everything before, right? They've seen it before, they've been in that chair for 25, 30 years. And the manager that's sitting 15 yards away from them in the corner office has been doing it for 35 years, and all the people around him. These are very experienced people. And so when a client comes to them with a problem, they're not answering it in this robotic bundled large corporation type of manner, they're actually anticipating the problem and the next three or four steps that will be a chain reaction, and sorry to be long winded here, but and therefore giving them proper advice and proper solutions, and you just can't put a price tag on that.
Josh Itzoe: Right.
JD Carlson: So I think there's a massive advantage to having specialist. When that's achieved, that's of course type of thing to say, there's a huge advantage than people that are specialists that know what they're doing, versus people that's just part of the gig.
Josh Itzoe: I couldn't agree with you more. So I love this kind of line of thought, and I totally agree with you. At the end of the day, ERISA is so complex, and it can't be a sideline gig. And I think that is where specialists, the role that you guys play, like you said, a really good TPA, that compliance support, I think, at the end of the day, from an advisory perspective, wanting to bring together the best people, the specialist on the team, there's a virtuous cycle, right? At the end of the day, when you have a good specialist on the compliance side, and that was my point with... I'm finding more operational issues today, I feel like than five years ago, and maybe that's just because it's easier to uncover them now. But it seems like more errors are being made, especially with bundled plans.
So I think what you're talking about in this idea of partnering with advisors, I see you being a secret weapon in some ways for specialist advisors, because there may be less time that's necessary having to hop on these operational calls with the plan sponsor with the record keeper, unwind or figure out next best step because an operational failure and admin failure occurred.
So having a really valuable TPA, I think is essential to really help that whole process. And the reality is, like you said, there's a cost allocation, whether it's bundled and built in or not, there's still a cost to it. And a lot of cases, what I found is with even with advisory firms, with folks like Plan Design Consultants, maybe it's we charge a little bit higher than average fees, then some jabroni that's out there that is a generalist. But it's not that much more expensive. In some ways, it can be the same or less cost if there is no fiscal accountability. So I think that role of TPA, what you're talking about, and sounds like that's really what you technician experience.
JD Carlson: I think costs, I believe, costs have to be reasonable, right? We're talking about people's retirement, we're talking about fees have to be within a certain line. So don't get me wrong, I'm not... what I'm about to say is, it's not being aware and insensitive to fee structure. However, we've talked about the severity of this industry, we've talked about the importance of it, we've talked about the liability of it. And I'm a small business owner myself, right? I mean, with two dozen employees, I'm a micro small business.
I'm happy to pay 5000 extra dollars in a year, 10,000 extra dollars for a better paperless system, a better printer system. Hell, I'll pay 10 grand for a better employee, right? So I will spend thousands, and thousands of dollars to have something that I think is a better fit for my company without blinking an eye. And I'm a small business, I'm not a big company.
With that said, I also think that we need to be very careful, record keepers, advisors, and TPAs, and I'm going to focus on advisors and TPAs right now, and I'm going to hyper focus on advisors. We've gone through this fee compression, I think we need to be very careful about promoting our solutions as a whole as an industry in this simple, cheap type of flow. If your go-to thing is just spreadsheet and find your clients the most affordable option, and that's the value that you're putting in front of them, that's how you're now characterizing our product as a whole. Your product, my product, and the record keeping product as it's some type of commodity, or you're going down the street to get a carwash or something.
And the reality is that should be looked at much more like you're choosing a CPA or an attorney or... And I think I'll shut up with this, but I think advisors should treat our products that his firm has, as been complex, embrace the fact that it's fucking complex, because it is. And therefore, look to sell more robust professional solutions that your clients can benefit from. And I say this kind of a soapbox mentality, because I feel like there's just this huge tidal wave going the other way, and it's people just trying to win the plan and trying to make a buck, and they are hurting themselves for the future, and they're hurting our industry as a whole.
I think, and when I say, you, I'm talking to advisors all out there in the world. When you sit down with your client, think about what your client really wants, and I don't think it matches up with low costs. I don't really think that's their goal. I think why they're hiring you as a consultant, and putting their trust in you, is because they're putting themselves in your hands. And they want you to guide them towards solutions that will keep them safe, of course, be cost efficient, but be the right prudent decisions. And therefore, going bundled, fee compression, this is easy, don't worry about it. It's the lowest cost, it just seems to be so counterintuitive to me. That's not what's right for industry. Sorry.
Josh Itzoe: No, that's all good. I mean, I think the problem I still see there's a ton of fat within the industry. And I think partly, it's an interesting thing with a lot of planning sponsors. I agree with a lot of what you said. I do think fees are still a black box for most companies. When you're starting to bring in specialists like Plan Design Consultants or Greenspring advisors or our brethren that are out there. Absolutely, I think offering a premium service, but there's a lot of plans, especially, if you look probably 95, maybe 98% of plans are under $10 million. And I think it's the big companies, they have the resources and the experience to hire really good specialists, but down market, you get a lot of people that are, I think getting fleeced, and I just say that not to... it's more of a critique on the industry is that...
The problem with companies and this is a whole different tangent that I could go off on is, they're the ones who hire folks like us, but they don't use their own money in most cases to pay for it, right? They're using plan assets, right? So there's not a high incentive. As a small business owner, you probably pay for health care directly for some of your health care costs, right? For your employees.
JD Carlson: Sure. It's my-
Josh Itzoe: Sort of-
JD Carlson: ... second highest line item. Yeah,
Josh Itzoe: Yeah. So you have a strong incentive to basically try to... you want good service, but you want to balance that with reasonable costs within the extent that you can. If you could just shove all the health care costs into the plan, and then never hit your P&L as a business owner, you might be less inclined to less incentive to really start to negotiate in a really, really good way. And I just think that's a natural. I mean, me as-
JD Carlson: I don't think-
Josh Itzoe: ... co-founder of Greenspring, same type of thing.
JD Carlson: I don't think you can argue with what you just said, but let me try to anyways. In most case-
Josh Itzoe: I love it, I love it.
JD Carlson: Sure. The 401(k) fees are borne by the participants, aka the plan assets. Now, of course, and this is the basics of ERISA law, right? Well, then, if you're making poor decisions, and you're eating into their future and their retirement, you're literally taking money out of the pockets of the people that work for you. And so therefore, we won't get, I digress, we won't go to all that.
But so it's slightly different in that sense, I of course, do not believe that there should be a black box, and I think that, that's a huge problem. So and you mentioned the south of 10 million do plan sponsors understand their fees? No, they don't. So there is a black box that exists. However, I feel as though that's the advisor's role. That's why they have a financial advisor, is to make sure that the black box, they pop open the hood, they show them the engine and help them make decisions that they can be confident in.
However, I don't think that it's the large market, the mega market that can afford the specialists, I actually believe that more problems occur in small plans. So my larger clients are time consuming, for sure, and I've got clients with thousands and thousands of employees. But they've got solid HR teams, and they've got great accounting software and payroll, they're just actually really easy to work with. It's the six person firm and the 15 person firm, and the 23 person firm, where shit goes wrong.
When you have smaller census, when you make a move, and you make that move three degrees to the left, it creates far bigger vibrations and problems. And so to me, it's more necessary in the small market. I think that's a misnomer, where people are always like, "Oh, well, small plans, they're a piece of cake." And I look at that, and I laugh my ass off, because I'm like, "No, it's small plans that are pain in the ass. It's the big plans that work smoothly." So anyways, again, you say—
Josh Itzoe: I think that's a great idea.
JD Carlson: ... I say—
Josh Itzoe: No. I actually think I'm on the same page with you. I guess my point being is what I wish, if I could wave a magic wand, I would have companies pay more direct costs for folks like you and-
JD Carlson: Hallelujah.
Josh Itzoe: ... folks like us. And instead of paying it out of the plan and getting a free ride on your participants paying for it, you should pay for it out of your general assets. Because once you do that, and your incentives are then aligned to say, "You know what? I'm willing to pay for a premium service." So that's a whole nother tangent-
JD Carlson: I would love to see that, seeing small movements towards that. I wish they would catch more fire, and that would be a bigger trend. For obvious reasons, we don't see it as a bigger trend, but don't forget too, if you were paying, the more you pick up the bill as a plan sponsor for the cost associated with your plan, the better you are from a fiduciary liability standpoint, I mean-
Josh Itzoe: Absolutely.
JD Carlson: So it's a great decision in that way. It is a business expense. There are certain tax credits now and things. So anyways, I'd love to see that. And to the advisors out there, I think people get caught up in the all or nothing too, it's like, you're either going to do it the black box way you're talking about, or you're going to do it the new way that you're talking about and people get cold feet. You can go anywhere in between. You can create a hybrid. So just take off small consumable bites with your plan sponsors to start shifting some of those costs from the assets, so they're writing a check for it and explain to them why it's a good thing. And just start that voyage, start down that path. It doesn't have to be all or nothing.
Josh Itzoe: Yeah, I love that. I love that idea. I mean, we found that over time, and I'm a big advocate for really aggressive implementation of automatic features. And my first book, Fixing the 401(k) in 2008, I talked all about automatic enrollment—
JD Carlson: We'll see over-
Josh Itzoe: ... escalation up to 15%.
JD Carlson: We'll see over under how many times you mentioned your book in each pod, I'm going to go to stat, I'm going to listen to that.
Josh Itzoe: I would say it's probably eight or 10 times. I mean, look, I'm trying to... Nobody's ever going to confuse me being Ernest Hemingway, but I think it's worth a read. If you got insomnia, anybody who's listening, if you're having trouble sleeping at night, for whatever reason, by chapter three or four, either of my books, you will be sleeping like a baby. You talk a lot about you guys market this, which I love, this different branding, but this kind of smart, easy, awesome service model, I think?
JD Carlson: Mm-hmm (affirmative).
Josh Itzoe: Talk about that just real quick. I want to understand what is that? What do you mean by that? And how do you make things Smart, Easy and Awesome for plan sponsors, and for advisors?
JD Carlson: Smart, Easy, Awesome is, started from, it's like our internal chant, if you will, so. And then it evolved to how we brand our operation and our client experience. So Smart, Easy, Awesome, just means like, "Hey, we get it." The most important thing from us, and that's why it's smart, it's first and this list of three words is, the shit's got to be done right, right? You want quality work done by experts, that keeps you right with the Department of Labor and the IRS. And so that's smart, intelligent work. That's what you want from an experience firm like Plan Design Consultants.
The easy part of it goes more to the client experience. And as a second generation, family owned business, who learned from my father, I think the … of the '70s, and the '80s, and the '90s was very complex when looked at it from the client's perspective. There was lots of moving pieces, lots of information changing hands all throughout the calendar year, lots of complicated letters, and notices, and warnings about certain IRS regs and all this kind of stuff. And I think my dad was proud of that.
When I came along and took over the steering wheel or the helm of the business, I wanted to look at a lot of those things and see where I can simplify. Where can I take something that maybe we could have the client do less? And so I started to just look through the entire user experience from A to Z, and start to pull out things where I thought we could make it a little easier for the client.
So that's the easy concept, is creating an easier cloud experience where we can do a lot of the heavy lifting, almost keep you in the dark on things that you don't need to know about. We just get it done for you, and just come to you and bother you for the things that we find are really, really paramount, are really, really necessary. So—
Josh Itzoe: That's a winning value prop, by the way. Yeah, love that.
JD Carlson: Yeah, it's a balancing act for sure, though, because you've got to make tough decisions about... like you said that nauseam how complex our industry is, so you got to make tough decisions about what things you shadow them from or protect them from. And the awesome part and comes to thrown some pizzazz on it, right? So this starts to maybe blend towards this to Retireholiks concept, that is like, "Okay, how can we take it out of the norm and make interacting with us fun?"
And so we do that by sprinkling humor in our emails, and in our communications with our clients. Getting rid of the jargon, and using a bit of slang in some of our communication. So I've really taken my company from my father's way which a lot of the communication pieces and a lot of our interaction with clients would almost be like you're speaking with an attorney or something. And I've tried to evolve it to or some might say de-evolve it to a where you're talking to your neighbor, you're talking to your friend. And so when you choose when you interact with Plan Design Consultants, you're going to find this more, again, fun, lives and hopefully I put a smile on your face. Or you're reading the census collection in January and you chuckle, if that happens for me then I feel like that's a win, so that's smart, easy awesome in a nutshell.
Josh Itzoe: Do you have the not safe for work thing on there for the communications? This is the 12th episode of the Fiduciary Podcast. This is the first time I'm going to have to check the box with my podcast host, I think around explicit content because you've thrown some zingers in there today so far. So, that is a first with the fiduciary podcast. I love it. Thank you.
JD Carlson: Yeah, no worries.
Josh Itzoe: So anyways, let's talk about Retireholiks, because that is something that you launched a few years ago really well known within the industry. You guys are like YouTube stars. What's really cool is you bought brought some fun and some flair and some really good thinking. You've humanized I feel like our industry and a lot of ways. So talk about Retireholiks. What is it? How did you come up with the idea? What have you learned from it over the years as you've been doing it.
JD Carlson: It's changed a lot. Originally, we just got together, and my brother who's Brandon Carlson, who's the producer for Retireholiks, five, six years ago was like, we need to get into video, right? So if you think about back in that day, much like advisors, we were doing PowerPoint presentations at stake houses, right, and combining our efforts with record keepers to bring people to a small hotel room and give them coffee and bagels in the back of their room, and talk to them for three hours, sometimes we'll see credit or whatever. Yeah, so that's classic marketing, right? And then it evolved to webinars with technology.
And it was my brother, who was really like, "Why aren't we putting this stuff on video in that same type of education and then just letting people view it on demand, right? So they don't have to show up for a webinar on Wednesday at 10:00 AM. Just fricking create the content and then put it out there, and then they can just consume it whenever they want." And so I was like, "Okay, you're right, you're right, we got to get it on video." And originally, that idea was Chad Johansen, he's one of the members of Insync for our original analogy earlier when my co-hosts, sorry, not co-host, one of my backup, or whatever you want to call it with-
Josh Itzoe: He's a backup dancer, definitely. The backup dancer.
JD Carlson: Backup dancer, I'm going to use that one tomorrow, on tomorrow's show. Yeah, it was going to be me and him and Susan in our conference room, discussing the 401(k) industry and certain things, because we thought we'd bring our own—
Josh Itzoe: Do you own a tie?
JD Carlson: ... and... except fricking cuff links, man. I was all about it. And so we're going to talk 401(k) stuff. And then, we actually had two younger people in the office. They're rebels, they used to hit Nerf golf balls around the office, and they said, "Hey, you guys are going to do this. You should just do it. Have some fun with it." And so we literally got a little pow wow back in the server room, and started brainstorming like, "Okay, how can we make this different to stand out?" And just snowballed from there.
That day one, they came up with, "I think we should drink some beer on the show." That got chuckles and laughs and then it was like, "We maimed it that first day, we're going to call it Retireholiks, and the Ks are going to have parentheses." And so there's beer involved, alcoholics, Retireholiks, you're obsessed with it like an addict would be." And then it was like, "Let's make it crazy. Let's throw in some games and fun, and we'll put all this stuff to supplement this really boring content of 401(k)."
So we went off and running, right, and I think we were feeling within two weeks, it was horrible. The audience sucked. And I remember even being nervous, sitting there like, "Why am I nervous for filming some stupid show on YouTube?" And then it just evolved, man, and it's like... Well, five, six years later, and it's been a lot of fun, it evolved to having big time gas. We ended up getting at a certain point, it was like three, four years and we're big national conferences. We're getting their attention, and they were like, "We want you guys to come and do your show on stage." And so that's been a lot of fun. That was never the intention, that was never written up in the original plan. And now I would say pre and hopefully post COVID, that was my most fun part, was getting up and doing in front of hundreds of people on a stage. It was like a kick that we had never anticipated.
And then we just, not to be like book plug guy like you, but phenomenal guests, man. I mean, just like industry titans, like icons of our industry that I reach out to an email and say, "Hey, do you want to be on our silly beer drinking show?" And just hold my breath, and they write back like, "Yeah, I've heard of it. Oh, my God, I can't wait to be on" And so that's just been so much fun.
And okay, so all the fun aside, and I told you before we started this, the podcasts that I've listened to of yours, I really got a lot of value out of and I thought you almost had this journalistic nature. Yes, I can tell your wife the same things later. And so I was really impressed by your ability to talk to your guests and really hash out the subject matter. Well, that's also a goal of Retireholiks, right? In the midst of the beer drinking, and the Smirnoff Ice chugging and the silly games are, not to get all serious now, but are some very relevant retirement plan conversations with huge guests that have huge brains and have massive careers.
And the whole time we're just really trying to provide value to the audience, which is intended for advisors, but it's really evolved into advisors, TPAs, industry professionals, et cetera, and then just have a lot of fun with it at the same time. I get up for it. We do it every, my God, every Thursday through COVID. And I get fired up every Thursday like, "I'm going out to perform a fricking rock concert." Like, "Okay, what's it going to be like? Let's do this shit." So anyways, that's Retireholiks.
Josh Itzoe: Well, I think-
JD Carlson: Whatever that all meant.
Josh Itzoe: Whatever that all meant. No, but I do think you've done an awesome job with it and again, bringing some personality and some flair to an industry. And quite frankly, we love this stuff, but I mean it can drone on and most of our clients don't wake up saying in the morning like, "I can't wait to dig into really complex of this stuff." So I think you guys have done a really good job packaging it. You guys have become very popular, obviously from that perspective.
JD Carlson: Can I tell you real quick, just on behalf of industry? I-
Josh Itzoe: Before you do that, can I plug my book real quick, one more time-
JD Carlson: Sure.
Josh Itzoe: ... before-
JD Carlson: Please, don't.
Josh Itzoe: ... we're ready to go?
JD Carlson: Please, don't.
Josh Itzoe: Yeah.
JD Carlson: I think it's always going to be hard to get plan sponsors to want to consume that stuff. And I think maybe next to impossible. And so I really feel like the advisor is the conduit, right? It's the advisor that needs to understand all this stuff. And so for us, it's a lot easier and that advisors are intended audience. And so I think good advisors that want to be good at 401(k) should be excited about consuming information like that, and especially if it can be fun on Thursday night or with a live show on stage.
But I also want to let you know that as boring and conservative as our industry might be. That's one thing that I've learned that I didn't realize is Frederick, iconic ERISA attorney who I used to walk by in conferences early in my career and be like, "Oh my God, there's Frederick." Like a walking god of ERISA in a suit and tie and conservative. He's a personality man. He's fun, he's charismatic, he's cool, and he loves what he does. And so it's been a blast. Yes, it's been a blast.
Josh Itzoe: He wrote the foreword to the book, solid. He wrote the foreword to the book. I appreciate that softball, you just gave me right there, JD. Awesome. Yeah, you're right. People in the industry-
JD Carlson: ... are solid. They love what they do, and they have fun.
Josh Itzoe: Yeah, absolutely. So let's talk about you've had a chance to interview lots of people. And like you said, lots of big hitters in the industry. Talk about the handful of things, couple of things where you think over the next three to five years, where is this industry going? And where do forward thinking TPAs, Plan Design Consultants, advisors, where do they need to really focus and start to invest or overinvest in order to skate to where the puck is going, as opposed to where it is today?
JD Carlson: Imagine me running to my garage right now and grabbing my tinfoil hat, and because I really have one, and I'm placing it upon my head. Our industry is going, as I mentioned a little bit earlier, it's going through this massive change, and there's a couple of huge things that are happening. First and foremost, it's the importance of data and specifically participant data. The big tech world is looking at retirement plan data and licking their chops in terms of to know that type of information for an individual, it opens up all types of doors for them in terms of what they could sell them and strategically sell them, the same way, a Google search brings something specific to you or Amazon or whatever.
So anyways, they're very, very excited about that. That's concerning to me as an industry person, because I'm starting to hear of strategies and plans where entities will give away 401(k) services, literally give it away. And that could be your services as an advisor, that could be my services as a TPA, it could be record keeping services, we will give it away to have access to that data, to be able to sell these, what I would call monetize the participants. Okay? And so that to me, with the tinfoil hat on, creates this really strange moment going forward. As 401(k) evolves, and I think it's a good thing that we're evolving, and I think we should use technology. And I'm actually not against using data to strategically, I shouldn't say sell, but to strategically put the right product or solution in front of the person that needs it. I think those are all phenomenal things. My concern is who's in charge of it and why? And what is their motivation?
And so the tinfoil hat guy says, "I'd like to see advisors, Josh, in control of that stuff. I'd like to see the advisor as the guide to the plan sponsor and really the quarterback, the person in charge of the plan, and how data is being used and what technologies are being used to make that plan more efficient. I don't want to see it in the hands of the record keeper. I don't want to see it in the hands of other third party entities. And call me old school, I feel like advisors have beating hearts and have integrity and have ethics, and I feel like large companies are after nothing more than greed and the mighty dollar and profitability.
And so I almost see this war happening between the two groups. Now, with that said, it gets complicated, because there are advisors that don't want to have to do any of that stuff. They don't want to be involved in monetizing a participant, they don't want to be involved in... And this is the other big thing that's happening is, right, this convergence of health, wellness and retirement. And so there's talk of the advisor of the future, being an advisor firm of the future, being able to help clients in all three of those spaces, health, wealth, and 401(k), which is very different from 15 years ago.
And if you talk to JD from 15 years ago, I would have hated that idea. I would have been like, "Oh my God, no, I want a 401(k) to be a 401(k) specialist only. Now I'm warming up to the idea or being forced to, have the gun to my head warming up to the idea of, "No, it's probably going to be a more conversions type of solution." And so now I'm getting on that train that bandwagon and advocating for it. But now I want it to be done by the right people." So anyways, really interesting dicey times right ahead of us, and they're going to happen so quickly. And it's going to be crucial how advisors deal with that.
And so yeah, my brain is consumed with that, so much so that I want to bring it up on Retireholiks every Thursday, and my buddies there, my backup dancers are like, "Oh, God, are we talking about this again? JD stop. But I think it's just so important.
Josh Itzoe: It 100% is important. And I actually think that is the next... I think for the foreseeable future, fees are going to continue to be a hot topic of ERISA litigation. I mean, if you look in 2020, alone, the number of risk cases filed around 401(k) fees was up fivefold. So I just think that's like we're still in the early innings of fee litigation. But I think data security, and data privacy, which I would... I would describe data security as more of protecting participant data, personally identifiable information data from being hacked we saw in April.
There was a case filed against Abbott Labs around a participant claim that she had like, I don't know, $250,000 stolen from her account. So I think litigation around data security, but the Vanderbilt case, that was settled with Vanderbilt last year for whatever the timing was. Had a specific provision, non-monetary damages around protecting data privacy, and that record keepers giving away services or using that data in order to market. And I'm with you, I mean, I'll put my tinfoil hat on. I agree with everything that you said.
And in a lot of ways, I think the essence of being a fiduciary is I've equate that to being an advocate. And who is going to stand? It's so important to figure out alignment of incentives. What's driving the incentives of someone? And once you do, you'll get a sense of what they're going to be motivated to do. So I love that you're talking about that. And I think we're going to see, both in the real world and in competing for business. In the court system, I think you're going to see more and more litigation around some of that that cross selling. And how do you create the rules of engagement? And how does the plan sponsor create the rules of engagement with their service providers in terms of the services you provide? What does that mean, and what's out of bounds? So I think that's a great point. So as we see it like—
JD Carlson: I think unfortunately-
Josh Itzoe: ... evolving.
JD Carlson: Unfortunately, and or fortunately, Wall Street is so powerful, though, Josh, that I think the only types of rules we're going to see are going to be around disclosure and signing off of the plan sponsor. So I think realistically, I don't see this happening any other way. We're going to see down the line is like, "Look, you're signing up with Record Keeper Acts. And on page 34 of your contractual agreement, it's going to talk about the fact that they have partnered with other fourth party entities that are going to use your data to strategically sell you this. They've created their own." And you're going to initial the box and you're going to sign off on the fact that they can have access to your data and you're going to hear about it same way we talked about fiduciary responsibility today.
So there's no stopping that buses, what I'm saying, it's going to happen. And it should. To be honest with you, it should. We should see a 401(k) in the future that can really help participants on all things, financial planning and wealth management, I think that would be A plus, to do that, but it just needs to be done properly and it needs to be done right. I think that's where things are going to get really exciting, and that's where...
Here's my pitch right now. I'm waving this huge flag, and what I would like to see is financial advisors across the country revolt. It's a revolution to stand for their power and their position with what I interpret to be their clients. And they need to hold the record keepers under their foot. They need to put the advisor foot on the throat of the record keepers and say, "Look, these are our clients, we're the ones with integrity, we're the ones with athletes, and we're going to force you have to build and do things to support us. If you cross that line, you start throwing around our back to take advantage of our clients and sell them things that they're not aware of, or whatever, then you've gone too far. And we're gonna ostracize you from the industry. And we'll show you the power that advisors have across the country." And I just want to see that happening now, before it gets too far away from us. And these guys just backdoor you on all this stuff. There's some major tinfoil hat shit on right there, right?
Josh Itzoe: Big time. 100%. Man, you should run for office JD. I mean, I love it. I love the passion.
JD Carlson: I will lead that revolution. But I will not be we'd be wearing horns or some furry best, I'll be in a suit and tie.
Josh Itzoe: Okay, got it. What else do you think just in terms of where we evolved? So obviously, there's the data, the data piece around that. You mentioned, talk a little bit about from your perspective, you mentioned a little bit about, this convergence of health and wealth and planning and wellness, which is, if I got to hear the word financial wellness, or the phrase, financial wellness, again, I think I might throw up just in terms of, not that I don't believe in financial wellness, but I've talked a lot about it on the show, it just... you ask 10 people, you get 10 different definitions of what financial wellness is.
So what's your take on the whole wellness movement from your perspective? And the fact that you don't offer that, puts you in an objective position. I think you can render an opinion objectively.
JD Carlson: Hopefully, I feel like I'm pretty objective on some time. But we've had huge wellness advocates on the show, right? CEOs and founders and wellness companies. And I'm with you, I always end up with my head spinning around what is they're doing, they'll see me tackling it differently. I think the biggest negative against wellness right now is just ability to actually make an impact. You can go ahead and offer it to a firm of 500 employees. And when you really start to dig in the data, it's like, okay, 30 of them are using this solution, and of those 30 that are using it, only half of them are even using it in any kind of significant way.
And so this is impact problem that we're having with wellness. And I think that's a big deal. I think that's something that we shouldn't give up on it. We need to keep moving forward, but we need to keep evolving and trying to find better ways. And I think the real answer to that is, it's a tough one, but it's a combination of plan sponsor involvement and technology. So we need the plan sponsor to be the advocate for it. We really need the advisor, that conduit, that quarterback to be the advocate for it. And then these wellness solutions need to use real people and technology together to service business.
And here we go again, this is what makes this industry so fun, is it gets dicey in that, you said people, it's like so you're going to have this bank of CFPs that are answering financial planning or wellness questions for participants. Doesn't that step on the toes of the retirement plan advisor? And I think that much like my earlier tinfoil hat stuff, we need to find solutions or the advisor chooses, right? The advisor toggles like, if you are an advisor shop and you've built up your own cubicles and banks, and people that can handle questions from your plans and their people, then great. Hats off to you. But maybe your advisor shop, you focus on retirement plans, you believe in wellness as an add-on solution, and you need to outsource that wellness to someone else, I think that's okay too.
But what you can't ignore right now is in the future, and we're going to see this from the top up, right? And usually what happens in the big mega market tends to fall its way down to the micro market. And we know this because of massive acquisitions, right? We know this because what's happening in terms of this convergence of health, wealth and retirement is happening in these huge, $100 million dollar plus billion dollar deals, right? And because these people are setting up their chess pieces to win this game in the long run. And so I think that advisors should be aware of that, and should be massively aware of that. And they should be building a business that when they go to see their prospects or their current clients, they have solutions that are health, wealth and retirement. I think that's a choice that many of them should make, which again, is counter to what I would have told you 10 years ago, I would love the idea of a 401(k) specialist, I think it's going to be different going forward.
With that said, I think we always talk about these macro topics and lose sight of the fact that there's always going to be niche players. I don't care how cool technology is, how much this convergence has happened to those three things, and how big these massive national players get, there's always going to be a successful advisor, that's a retirement planning niche that can walk into a prospect and say, "F all that stuff. I'm here, I'm on the ground, I'm an expert, I can walk you through these things," and those people are going to be successful. I just also would love to see that that smart entrepreneur advisor consider the future of, "Well, could I possibly make more revenue if I was selling these three things?" And selling is such a bad word, "But if I was offering my clients these other things that could help them..."
And by the way, do Venn diagram with a 401(k) retirement planning. And here's the best analogy, I came up with it on the spot several weeks ago, and I'm abusing it every time I can. It's like the advisor owning a gas station, and then the adviser saying... all successful gas station owners, I think the good ones say eventually like, "Shit, I should have a mini mart in my gas station where I can sell people Cokes and Doritos and sticks of gum." And then they evolve, and—
Josh Itzoe: That's where they make all their money.
JD Carlson: Dude, right? That's where they got the money. Or you know where they make all their money, I've learned. "Hey, we should do car repair." So we should have actual garage where people can come and get oil changes and get things fixed in their car," because that's a big revenue source. And then lastly, "Let's put on one of those fancy car washes on the side, where people can take a car to." You're just maximizing your footprint as a gas station. And I would argue, and here's the good part of it. It sounds as though you're selling, you're in this evil empire selling, you're creating convenience for your clients. And so I think that advisors should think about, I'm not saying they have to, but I think it'd be smart for them to think about how can they have a gas station type business into the next five, 10, 15 years?
Josh Itzoe: Well, it's interesting, in this world where things are getting more complex, and I do think that's the kind of the plan design consultants, value prop that you talked about earlier, I think is a good one, I think it's a good one for advisors to think about too is, we want to talk about the technical, the nuts, and the bolts and the bits and the bytes, which you need to have that technical capability and those chops. But at the end of the day, if you think about our clients, our mutual clients, plan sponsors, they are being asked to do more with less, they have a lot more work on their plate.
And I do think the message of, "Hey, this is about a good user experience, and it's about convenience. We're going to only come to you on the stuff that you really need to know about. And the other stuff, don't worry about it. We'll take care of it for you." And I do think there's a compelling value proposition around that. The downside, I would just say in terms of, and the only counter I guess I would have to your gas station analogy, which, from a pure business perspective on entrepreneur 100%, because I think the research is strong that, it's why your bank wants you to invest with them, and they want you to use their credit card, and they want you to refinance your house with them, it's because the research is compelling.
If you can get multiple services, a client using multiple services, the switching costs, they just becomes that much more sticky, because "Oh, now I got it. If I leave, I got to get new this, and I got to get a new that." The inertia is really hard to overcome behaviorally. And then I think the other thing, the really successful, I guess maybe it's a wondering, in that gas station analogy, it's hard to do everything really, really well. So do you start to see enterprising firms join venture? "Hey, we're going to come together and let's figure out building a business where we focus on this, you focus on that, but we're going to do it as one company and we'll figure out a way to joint venture and bring excellence to each one of these components at the gas station. But not necessarily being delivered by the same company where they're probably going to be really good in one area and mediocre in the rest," if that makes sense.
JD Carlson: 100%. I think if you're like gas, and we're going to stick with this gas station analogy and hopefully you're listening and you're following along. Do you think that, that person that owns that gas station knows anything about car washing and, goes over to the side of their building, builds that carwash? No. They have a third party come in and build for them the car wash on the side of their space. And they put all the tech in for them, and they probably maintain it. I know they do. They maintain it and come back and fix things that go wrong with it. It's not as though the gas station person built the carwash for Christ's sakes.
So I think that the same is going to happen in our industry. And I think there's a lot, I don't think I know, there's lots of companies that are working really hard to build those solutions for advisors. And so to me, I know that, that's the negative, I know that, that's the con, right? You cannot … this. I don't know. I suck with analogy, not analogies, but sayings, like, "You can't be the expert of all those things, right? You're going to suck at some of those things." And say, in a sense, "That's irrelevant. You're going to find professionals to do those things and partner with you. And your job as an entrepreneur is to vet those out, and make sure that they fit well in your puzzle piece for what you're offering to your client." The guy or girl that runs that gas station also doesn't know how to. He's not a mechanic necessarily.
And so they're not going to go and then fix the engine of the cars that are in the garage. They're going to hire someone to come in and fix those cars. And it's just entrepreneur 101. So don't be so intimidated by it. I feel like we're so caught up in what we think a financial advisor has looked like for the last 20 years that we're unwilling to think creatively about what it could look like going forward. Get out of your own way and start to think about being a business owner that can put these different solutions in place.
Josh Itzoe: Yeah. So my four kids have all gone through their Lego phases, and my seven year old right now is addicted to Legos. I mean, all the time. And I think what you're talking about, it's an interesting moving from working in the business as a technician to becoming more enterprising and saying, "Hey, I'm going to focus on being more of like the architect that's going to take these Lego pieces." And how do I put them together so that they fit in a really cool design?"
That's a really interesting perspective that you're talking about with your gas station analogy. And it'll be interesting to see what evolves. I think we're in a really exciting time. I agree with you. Everybody wants to talk about technology, but I still believe technology is great in a very decision tree, workflow, if A, plus B, equals C formulaic. It's really, really good. But as we know, within the industry, whether it's in healthcare, whether it's in financial planning, whether it's in ERISA 401(k), 403(b), is it's like the sweater, like the thread on the sweater, right? You pull what you think is just one thread. Next thing you know, the sweater starts to unravel, because it's multivariate.
And in a multivariate world, I still think we're long ways from just the machines being able to anticipate and do everything necessary. I think there is that human element, that marrying of machine and human, I totally agree with you from that perspective, so.
JD Carlson: Long lives the financial advisor. I have seen for decades, record keepers create a really impressive technology that you look at you like, "Wow, this is cool. This is really, really cool." And then I see it just gathered dust because nobody uses it. And so to me, I really see the advisor firm as the entity going forward that I guess the best way I can picture it in my head, sits those 75 participants down in a room, has already gotten the buy-in from the decision makers or the fiduciaries and says, "Look at this tech, this tech is sick, everyone should be on this. This is why, let me walk you through it." And we have goals. You set goals for yourself and for the plan sponsor to say, "Look, we believe in this tech so much that you've got a five year plan. And by the time we get to year five, we want to have like 80% usage."
And it's you then that has the ability to move the needle. And so again, preaching the choir, but I agree with you, I don't think tech can do it on its own. It's going to need a human to really push it along and be the cheerleader and be the person that's accountable to make it work. But the only way for an advisor to even come close to having a gas station is to utilize tech, just from an efficiency perspective. There's just no possible way you're going to do it from a man hours perspective. You're going to have to use tech, but it won't work without you.
Josh Itzoe: Yeah. I think the advisor the future, I've been starting to say this, I don't know if anybody's listening, but I do think we are living in a world that is more complex. Clients are requiring more, it's harder to differentiate. The story you tell, and I think the story that I've told throughout my career, like five or 10 years ago, 10 years ago was very differentiated. Everybody says the same thing right now. And it goes back to what we talked a little bit earlier about fee compression, when everybody says the same thing, whether they do it or not, is a totally different story, and whether they deliver. But when everybody says the same thing, you just say, "Okay, well, what's the cheapest, and what's the least risk?" And so it's the lowest common denominator.
I do believe that a successful advisory firm of the future has to do two things. Number one, they're going to need to niche down. You can't just say, "Hey, we're a fit for everybody," because if you're a fit for everybody, you're really a fit for no one. So I think niching down, and I don't think it's going to be enough to say, "I'm a 401(k) specialist," if you will. I need to be a 401(k) specialist for civil engineering firms, between 107 150 employees that have these different demographics. That's more of a niche. And then I think the other one is being on the front end of finding, and then this is the key successfully implementing technology to be able to deliver a better experience to clients and to be able to scale your business. And that's the real difficulty is, it's easy to find cool tech. The harder thing is, how do you implement it so it actually works?
JD Carlson: Thank God that it's not all super easy. I mean, that's what's fun about running a business, making those choices and putting those things in place. And I agree with everything that you just said. I know I argued with you earlier, I think there's a perfect... I heard someone say the other day, "This niche thing is that, because of COVID and because of our acceptance of virtual and stuff, it's actually going to be much easier to be niche because you can expand your geography quite a bit now in terms of..." And so to be niche might be something even better than before. And then I want to leave you with this thought, is that you talked about all advisors feeling like they're sounding the same, right? They look and feel and act and walk the same.
I think that this convergence of health, wealth, and retirement and this tag gives them the opportunity, as they put their Lego pieces together, they'll become more and more different from their peers, right? Whatever Lego set you build, your gas station is going to look very different from the next gas station because of the tech that you chose to partner with. And because of how you've decided that you so intelligently put, how you decide to make it work and actually have an impact. So that's it, man. I think we've solved the world's problems right there.
Josh Itzoe: 100%. 100%. I was talking a couple of years ago to a CEO of a really large advisory firm, really thought forward thinking guy. And he was telling me that they had their annual advisor meeting, and one of the advisors stood up, and it goes back to your... what I think of under the hood, I think a lot of this tech, it's all going to look the same, but where you can really differentiate a niche is like, how is it branded? And he said, he had an advisor that stood up and said, "Look, I don't need better stuff. I just need different stuff." And I thought that was an interesting perspective.
I think the firms that are going to be able to put these things together and then brand it, and be able to differentiate from that perspective, or they're going to be the ones that win. As we wrap up, I want to ask you a couple of more questions, and then we can end the episode. So this is the whole goal of this podcast is to make ERISA fiduciary smarter. So what would be your single best piece of advice for ERISA fiduciaries? Whether that's a plan sponsor, or whether that's a fiduciary advisor, what would be your single best piece of advice for them to do a better job in their role as a fiduciary?
JD Carlson: It's tough one for me, because I'm obsessed with that, right? So on news feed, my email inbox, my thoughts in my head are always on these types of concepts. So it's hard for me to think of someone who's not. But so I guess my only advice would be really simple advice, which is, you have to make an effort, an organized effort to stay on top of this stuff. And so I guess my advice to the industry would be... and I know there's some of these things starting, they've been around for a little while, is that they just fall dead because plan sponsors don't want to be fiduciaries. They don't want to continue to be good fiduciaries and learn more in general, but as education, right, is lacking and saying that...
But this is my answer, that is we have to teach our plan sponsors on an ongoing basis, almost like certify them, give them designations. I can't tell how many times I've been in meetings with large plans with a committee of 10, and they're asking you the same questions they asked you the year before. It's like, no one here has learned shit from last year. And then for—and so I think it's important for advisors to maybe add that to their service portal, which is like one... I'm here to guide you all, but I'm also here to make you better at what you do. And so I'm going to hold you accountable as a committee, right? I'm going to teach you things, and I know you would do this, but metaphorically, it's like... and then I'm going to quiz you. And when I come back next year, if you haven't retained this stuff, you're going to sit in the corner with a dunce hat on because I need you guys to be on sharp and on your game as fiduciaries.
Josh Itzoe: I love it, I love it. Good, good, sound advice.
JD Carlson: Not realistic, but sorry.
Josh Itzoe: For 401(k) nerds, it is. I always say, if... get my last little perspective in here. I agree with you.
JD Carlson: ... book plug.
Josh Itzoe: No. No book plug here. No, you've shamed me into it. I might not mention the book. Who am I kidding? I'll find other ways to mention it. But if most companies ran their businesses the way they run their 401(k) plan, they would be out of business. And so that, I think to your point is, companies just need to... part of that education is that people speak, tell you the truth much more with their actions than with their words. And part of what we need to do as an industry, I'm very passionate about is getting plan sponsors and companies who at the end of the day, have huge influence over what retirement looks like for their people.
They need to raise their game and they need to own the responsibility more. Once they do, they'll start to align their actions with what they start to believe, but until they start to believe in the importance of this, it's going to be hard to get them to change their behavior. Where can listeners stay connected with JD Carlson and Plan Sponsor Consultants and or Plan Design Consultants and Retireholiks? What's the best way to stay connected with you?
JD Carlson: Yeah, it's pretty easy these days, right? If you just pop my name into Google, a bunch of crap comes up.
Josh Itzoe: You're so big time.
JD Carlson: Yeah, I mean, we have a pretty solid social media presence. So it's all out there. LinkedIn, Instagram, obviously plandesign.com, retireholiks.com. Retireholiks is on YouTube, Plan Design Consultants, JD Carlson and Retireholiks are on Instagram, Twitter, LinkedIn, you name it. So TikTok, so yeah. Retireholiks is on—
Josh Itzoe: Are you seriously on TikTok?
JD Carlson: Retireholiks is on TikTok, yeah. I think we have five followers. LinkedIn, I feel it's a huge—
Josh Itzoe: That's awesome.
JD Carlson: It shows a tune to me and my thoughts. And as I told you, Retireholiks, LinkedIn is really our main focus. That's where we're at.
Josh Itzoe: Okay. Here's what we're going to do at the end of the show, like I do with most episodes in the show notes, I am going to link to pretty much any resource I can find to direct them to you and to your team. And I just really appreciate you being on the show. This was one of my more exciting episodes I was really looking forward to. I think you've got great insights, I think you've you've done a phenomenal job of making 401(k) much more fun and interesting. And you've done a lot of great work to serve, certainly advisors but the industry in general. So I can't thank you enough for what you've done and for sharing your insights with the Fiduciary U™ audience.
Thanks for listening to today's episode with JD Carlson. If you'd like more information or to learn more, go to www.fiduciaryu.com. I've got some great resources there for you, including each episode along with show notes, articles, free tools, and online courses. Make sure to sign up on the site so we can stay connected. I'd love to help you stay in the know about what's happening in the world of corporate retirement plans. If you've got questions you'd like me to answer, topics you'd like me to discuss, guests you think would be a good fit for the show or any other feedback, I'd love to hear from you.
Also, head over to Amazon and check out my two books, The Fiduciary Formula and Fixing the 401(k). If you want an easy way to support the show, I'd really appreciate you leaving a review on Apple podcasts. It's the best way to help other people find the show and I read each one. Until next time, thanks again for listening to the Fiduciary U™ podcast.
Greenspring Advisors is a registered investment advisor. The opinions I express on the show are my own and do not reflect the opinions of my guests or the companies they work for. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such. Any statements or opinions are subject to change without notice. The information and content presented on the show is for educational purposes only, and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk, and unless otherwise stated, are not guaranteed. Information expressed does not take into account your specific situation, or objectives, and is not intended as recommendations appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment advisor to determine whether any information presented may be suitable for their specific situation. And past performance is not indicative of future performance.
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